BALTIA AIR LINES, INC.
UNDERWRITING AGREEMENT
New York, New York
Dated: , 1997
GLOBAL EQUITIES GROUP, INC.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
and
Suncoast Capital Corp.
_______________________________
_______________________________
Gentlemen:
The undersigned, Baltia Air Lines, Inc., a corporation
incorporated under the laws of the State of New York (the
"Company"), proposes to issue and sell to Global Equities Group,
Inc. ("Global") and Suncoast Capital Corp. ("Suncoast"), the
"Underwriters" named on Schedule A hereto, pursuant to this
Underwriting Agreement ("Agreement"), an aggregate of 1,000,000
shares of the Company's Common Stock (the "Common Stock") and
3,000,000 Redeemable Common Stock Purchase Warrants (the "Public
Warrants"). The Public Warrants are exercisable to purchase one
share of Common Stock, at any time commencing one year from the
date on which the Registration Statement (as defined in Section
l(a) hereof) shall have become or been declared effective (the
"Effective Date"), and ending on the fifth anniversary of the
Effective Date. The Public Warrant exercise price, subject to
adjustment as described in the agreement providing for the
Warrants (the "Warrant Agreement"), shall be $6.50 per share of
Common Stock.
Commencing one year after the Effective Date, the Warrants
are subject to redemption by the Company at $.125 per Warrant,
provided that (a) prior notice of not less than 30 days' written
notice is given to the holders of the Warrants (the
"Warrantholders"), and (b) the last sale price of the Common
Stock for a period of 20 consecutive trading days ending no more
than three days prior to the date of any redemption notice,
equals or exceeds U.S.$ 10.00 pr share, subject to adjustment.
In addition, the Company proposes to grant to the
Underwriters the Over-Allotment Option (as defined in Section
2(c) hereof) to purchase all or any part of an aggregate of
150,000 additional shares of Common Stock and 450,000 Warrants,
and to issue to you the Underwriters' Warrants (as defined in
Section 12 hereof) to purchase certain further additional shares
of Common Stock and Public Warrants.
The aggregate of 1,000,000 shares of Common Stock to be sold
by the Company, together with the aggregate of 150,000
additional shares of Common Stock that are the subject of the
Over-Allotment Option, are herein collectively called the
"Shares." The Shares, the Warrants to be sold by the Company,
the additional Warrants subject to the Over-Allotment Option and
the Warrants issuable upon exercise of the Underwriters'
Warrants, the shares of Common Stock issuable upon exercise of
the Warrants and the shares of Common Stock issuable upon
exercise of the Underwriters' Warrants, are herein collectively
called the "Securities." The term "Underwriters' Counsel" shall
mean the firm of Mound, Cotton & ▇▇▇▇▇▇, counsel to the
Underwriters, and the term "Company Counsel" shall mean ▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, Esq., counsel to the Company. Unless the context
otherwise requires, all references herein to a "Section" shall
mean the appropriate Section of this Agreement.
You have advised the Company that you desire to purchase the
Securities as herein provided. The Company confirms the
agreements made by it with respect to the purchase of the
Securities by you, as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to, and agrees with, the
Underwriters that:
(a) Registration Statement; Prospectus; A registration
statement (File No. 33-2006) on Form S-B2 relating to the public
offering of the Securities (the "Offering"), including a
preliminary form of prospectus, copies of which have heretofore
been delivered to you, has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933
(the "Act"), and the rules and regulations of the Securities and
Exchange Commission (the "Commission") promulgated thereunder
(the "Rules and Regulations"), and has been filed with the
Commission under the Act. As used herein, the term "Preliminary
Prospectus" shall mean each prospectus filed pursuant to Rule 430
or Rule 424(a) of the Rules and Regulations. The Preliminary
Prospectus bore the legend required by Item 501 of Regulation S-B
under the Act and the Rules and Regulations. Such registration
statement (including all financial statements, schedules and
exhibits) as amended at the time it becomes effective and the
final prospectus included therein are herein respectively called
the "Registration Statement" and the "Prospectus," except that
(i) if the prospectus filed by the Company pursuant to Rule
424(b) or Rule 430A of the Rules and Regulations shall differ
from such final prospectus as then amended, then the term
"Prospectus" shall instead mean the prospectus first filed
pursuant to said Rule 424(b) or Rule 430A, and (ii) if such
registration statement is amended or such prospectus is amended
or supplemented after the effective date of such registration
statement and prior to the Option Closing Date (as defined in
Section 2(c) hereof), then (unless the context necessarily
requires otherwise) the term "Registration Statement" shall
include such registration statement as so amended, and the term
"Prospectus" shall include such prospectus as so amended or
supplemented, as the case may be.
(b) Contents of Registration Statement. On the
Effective Date, and at all times subsequent thereto for so long
as the delivery of a prospectus is required in connection with
the offering or sale of any of the Securities, (i) the
Registration Statement and the Prospectus shall in all material
respects conform to the requirements of the Act and the Rules and
Regulations, and (ii) neither the Registration Statement nor the
Prospectus shall include any untrue statement of a material fact
or omit to state any material fact required to be stated therein
or necessary or make statements therein in light of the
circumstances in which they were made, not misleading; provided,
however, that the Company makes no representations, warranties or
agreements as to information contained in or omitted from the
Registration Statement or Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by
or on behalf of the Underwriters' specifically for use in the
preparation thereof. It is understood that the statements set
forth in the Prospectus with respect to stabilization, the
material set forth under the caption "UNDERWRITING," the
information on the cover page of the Prospectus regarding the
underwriting arrangements and the identity of the Underwriters'
Counsel under the caption "LEGAL MATTERS," which information the
Underwriters hereby represent and warrant to the Company is true
and correct in all material respects and does not omit to state
any material fact required to be stated therein or necessary to
make statements therein, in light of the circumstances in which
they were made, not misleading, constitute the only information
furnished in writing by or on behalf of the Underwriters for
inclusion in the Registration Statement and Prospectus, as the
case may be.
Except for the registration rights granted under the
Underwriters' Warrants, or as disclosed in the Prospectus, no
holders of any securities of the Company or of any options,
warrants or convertible or exchangeable securities of the Company
exercisable for or convertible or exchangeable for securities of
the Company, have the right to include any securities issued by
the Company in the Registration Statement or any registration
statement to be filed by the Company.
(c) Organization, Standing, Etc. The Company and its
subsidiary ("Subsidiary") are duly incorporated and validly
existing as corporations in good standing under the laws of their
jurisdiction of incorporation, with full power and corporate
authority to own their properties and conduct their business as
described in the Prospectus, and are duly qualified or licensed
to do business as foreign corporations and are in good standing
in each other jurisdiction in which the nature of their business
or the character or location of their properties requires such
qualification, except where failure so to qualify will not have a
material adverse effect on the business, properties or financial
condition of the Company or its Subsidiary.
(d) Capitalization. The authorized, issued and
outstanding capital stock of the Company as of the date of the
Prospectus is as set forth in the Prospectus under the caption
"CAPITALIZATION". The shares of Common Stock issued and
outstanding on the Effective Date have been duly authorized,
validly issued and are fully paid and non-assessable. No
options, warrants or other rights to purchase, agreements or
other obligations to issue, or agreements or other rights to
convert any obligation into, any shares of capital stock of the
Company or the Subsidiary have been granted or entered into by
the Company, except as expressly described or contemplated in the
Prospectus. The Securities conform to all statements relating
thereto contained in the Registration Statement or the
Prospectus.
(e) Securities. The Securities conform, or will
conform when issued, in all material respects to all statements
with respect thereto contained in the Registration Statement and
the Prospectus. The Securities have been duly authorized and,
when issued and delivered against payment therefor pursuant to
this Agreement, the Warrant Agreement or the Underwriters'
Warrants, as the case may be, will be duly authorized, validly
issued, fully paid and non-assessable and free of preemptive
rights of any security holder of the Company. Neither the filing
of the Registration Statement nor the offering or sale of any of
the Securities as contemplated by this Agreement gives rise to
any rights, other than those which have been waived or satisfied,
for or relating to the registration of any securities of the
Company, except as described in the Registration Statement.
(f) Authority, Etc. This Agreement, the Warrant
Agreement and the Underwriters' Warrants have been duly and
validly authorized, executed and delivered by the Company and,
assuming due execution of this Agreement and such other
agreements by the other party or parties hereto and thereto,
constitute valid and binding obligations of the Company
enforceable against the Company in accordance with their
respective terms. The Company has full right, power and lawful
authority to authorize, issue and sell the Securities and the
Underwriters' Warrants on the terms and conditions set forth
herein. All consents, approvals, authorizations and orders of
any court or governmental authority which are required in
connection with the authorization, execution and delivery of such
agreements, the authorization, issue and sale of the Securities
and the Underwriters' Warrants, and the consummation of the
transactions contemplated hereby have been obtained.
(g) No Conflict. Except as described in the
Prospectus, the Company and its Subsidiary are not in violation,
breach or default of or under, and consummation of the
transactions hereby contemplated and fulfillment of the terms of
this Agreement will not conflict with or result in a breach of,
any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or
encumbrance pursuant to the terms of, any contract, indenture,
mortgage, deed of trust, loan agreement or other material
agreement or instrument to which the Company or its Subsidiary is
a party or by which the Company or its Subsidiary may be bound or
to which any of the property or assets of the Company or its
Subsidiary are subject, nor will such action result in any
violation of the provisions of the Articles of Incorporation or
the By-laws of the Company or the charter of its Subsidiary, or
any statute or any order, rule or regulation applicable to the
Company or its Subsidiary, or of any court or of any regulatory
authority or other governmental body having jurisdiction over the
Company or its Subsidiary.
(h) Assets. Subject to the qualifications stated in
the Prospectus: (i) the Company and its Subsidiary, as the case
may be, have good and marketable title to all properties and
assets described in the Prospectus as owned by it, including,
without limitation, intellectual property, free and clear of all
liens, charges, encumbrances or restrictions, except such as do
not materially affect the value of such properties or assets and
do not interfere with the use made or proposed to be made of such
assets or properties by the Company or its Subsidiary or are not
materially significant or important in relation to the business
of the Company or its Subsidiary; (ii) all of the material leases
and subleases under which the Company or its Subsidiary are the
lessor or sublessor of properties or assets or under which the
Company or its Subsidiary hold properties or assets as lessee or
sublessee, as described in the Prospectus, are in full force and
effect and, except as described in the Prospectus, the Company
and its Subsidiary are not in default in any material respect
with respect to any of the terms or provisions of any of such
leases or subleases, and no claim has been asserted by any party
adverse to the rights of the Company or its Subsidiary as lessor,
sublessor, lessee or sublessee under any such lease or sublease,
or affecting or questioning the right of the Company or its
Subsidiary to continued possession of the leased or subleased
premises or assets under any such lease or sublease, except as
described or referred to in the Prospectus; and (iii) the Company
and its Subsidiary own or lease all such assets and properties,
described in the Prospectus, as are necessary to their operations
as now conducted and, except as otherwise stated in the
Prospectus, as proposed to be conducted as set forth in the
Prospectus.
The outstanding debt, the property and the
business of the Company conforms in all material respects to the
descriptions thereof contained in the Registration Statement and
Prospectus.
(i) Independent Accountants. J.R. ▇▇▇▇, P.A. CPA, who
have given their report on certain financial statements filed or
to be filed with the Commission as a part of the Registration
Statement, and which are included in the Prospectus, are with
respect to the Company, independent public accountants as
required by the Act and the Rules and Regulations.
(j) Financial Statements. The consolidated financial
statements, together with related notes, set forth in the
Registration Statement and the Prospectus present fairly the
consolidated financial position, results of operations, changes
in stockholders' equity and cash flows of the Company on the
basis stated in the Registration Statement, at the respective
dates and for the respective periods to which they apply. Such
financial statements and related notes have been prepared in
accordance with generally accepted accounting principles applied
on a consistent basis throughout the entire period involved,
except to the extent disclosed therein. The Summary Financial
Data and Selected Financial Data included in the Registration
Statement and the Prospectus present fairly the information shown
therein and have been prepared on a basis consistent with that of
the financial statements included in the Registration Statement
and the Prospectus.
(k) No Material Change. Except as otherwise set forth
or contemplated in the Prospectus, subsequent to the respective
dates as of which information is given in the Registration
Statement and the Prospectus, the Company has not: (i) incurred
any liability or obligation, direct or contingent, or entered
into any transaction, which is material to its business; (ii)
effected or experienced any change in its capital stock or
incurred any long-term debt; (iii) issued any options, warrants
or other rights to acquire its capital stock; (iv) declared, paid
or made any dividend or distribution of any kind on its capital
stock; or (v) effected or experienced any adverse change, or
development involving a prospective adverse change, in its
financial position, net worth, results of operations, business or
business prospects, assets or properties or key personnel.
(l) Litigation. Except as set forth in the
Prospectus, there is not now pending nor, to the knowledge of the
Company, threatened, any action, suit or proceeding (including
any related to environmental matters or discrimination on the
basis of age, sex, religion or race), whether or not in the
ordinary course of business, to which the Company or its
Subsidiary is a party or its business or property is subject,
before or by any court or governmental authority, which, if
determined adversely to the Company or its Subsidiary, would have
a material adverse effect on the financial position, net worth,
or results of operations, business or business prospects, assets
or property of the Company or its Subsidiary; and no labor
disputes involving the employees of the Company or its Subsidiary
exist which would affect materially adversely the business,
property, financial position or results of operations of the
Company or its Subsidiary.
(m) Employee and Independent Contractor Matters. The
Company and its Subsidiary have generally enjoyed satisfactory
employer/employee relationships with their respective employees
and are in compliance in all material respects with all
government, state and local laws and regulations, including but
not limited to, applicable tax laws and regulations, respecting
the employment of their respective employees and employment
practices, terms and conditions of employment and wages and hours
relating thereto. To the knowledge of the Company, there are no
pending or threatened investigations involving the Company or its
Subsidiary by the U.S. Department of Labor or corresponding
foreign agency, or any other governmental agency responsible for
the enforcement of such government, state or local laws and
regulations. To the knowledge of the Company, there are no
unfair labor practice charges or complaints against the Company
or its Subsidiary pending before the National Labor Relations
Board or corresponding foreign agency or any strikes, picketing,
boycotts, disputes, slowdowns or stoppages pending or threatened
against or involving the Company or its Subsidiary, or any
predecessor entity, and none has occurred. No representation
question exists respecting the employees of the Company or its
Subsidiary. No collective bargaining agreements or modifications
thereof are currently in effect or being negotiated by the
Company or its Subsidiary and their respective employees. No
grievance or arbitration proceeding is pending under any expired
or existing collective bargaining agreements of the Company or
its Subsidiary.
The Company does not: (i) maintain nor has it maintained,
sponsored or contributed to any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit
plan" or a "multi-employer plan" as such terms are defined in
Sections 3(2), 3(l) and 3(37), respectively of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
except for the Stock Option Plan described in the Prospectus;
(ii) presently maintain or contribute nor at any time in the
past, has it maintained or contributed to a defined benefit plan,
as defined in Section 3(35) of ERISA; or (iii) has ever
completely or partially withdrawn from a " multi-employer plan."
The Company and its Subsidiary have generally enjoyed
satisfactory relationships with their respective independent
contractors and are in compliance in all material respects with
all government, state and local laws and regulations, including
but not limited to applicable tax laws and regulations,
respecting the engagement of their respective independent
contractors.
(n) No Unlawful Prospectuses. The Company has not
distributed any prospectus or other offering material in
connection with the Offering contemplated herein, other than any
Preliminary Prospectus, the Prospectus or other material
permitted by the Act and the Rules and Regulations.
(o) Taxes. Except as disclosed in the Prospectus, the
Company and its Subsidiary have filed all necessary government,
state, local and foreign income and franchise tax returns and
have paid all taxes shown as due thereon on or before the date
such taxes are due to be paid; and there is no tax deficiency
which has been or, to the knowledge of the Company, might be
asserted against the Company or its Subsidiary.
(p) Licenses, Etc. The Company and its Subsidiary have in
effect all necessary licenses, permits and other governmental
authorizations currently required for the conduct of their
business as currently contemplated or the ownership of their
property, as described in the Prospectus, and is in all material
respects in compliance therewith. To the knowledge of the
Company, none of the activities or business of the Company or its
Subsidiary is in violation of, or would cause the Company or its
Subsidiary to violate, any law, rule, regulation or order of the
United States, state, county or locality, the violation of which
would have a material adverse effect upon the financial position,
net worth, results of operations, business or business prospects,
assets or property of the Company or its Subsidiary.
(q) No Prohibited Payments. The Company has not, nor, to
the knowledge of the Company has any of its employees or officers
or directors, agents or any other person acting on behalf of the
Company or its Subsidiary, directly or indirectly, contributed or
agreed to contribute any money, gift or benefit (other than legal
price concessions to customers in the ordinary course of
business) to any customer, supplier, employee or agent of a
customer, supplier, or official or governmental agency or
instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or
other person who was, is, or may be in a position to help or
hinder the business of the Company or its Subsidiary (or assist
it in connection with any actual or proposed transaction) which
(i) could reasonably be expected to subject the Company or its
Subsidiary to any material damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) if not
given in the past, could reasonably be expected to have had a
materially adverse effect on the assets, business or operations
of the Company or its Subsidiary as reflected in any of the
financial statements contained in the Prospectus, or (iii) if not
continued in the future, could reasonably be expected to
materially adversely affect the assets, business, operations or
prospects of the Company or its Subsidiary.
(r) Transfer Taxes. On the Closing Dates (as defined in
Section 2(d) hereof), all transfer and other taxes (including
franchise, capital stock and other taxes, other than income
taxes, imposed by any jurisdiction), if any, which are required
to be paid in connection with the sale and transfer of the
Securities to the Underwriters hereunder shall have been fully
paid or provided for by the Company, and all laws imposing such
taxes shall have been fully complied with.
(s) Exhibits. All contracts and other documents of the
Company described in the Registration statement or the Prospectus
or to be filed as exhibits to the Registration Statement, have
been described in the Registration Statement or the Prospectus or
filed with the Commission, as required under the Rules and
Regulations.
(t) Shareholder Agreements, Registration Rights. Except
as described in the Prospectus, no security holder of the Company
has any rights with respect to the purchase, sale or registration
of any Securities, and all registration rights with respect to
the Offering have been waived.
(u) No Stabilization or Manipulation. Neither the Company
nor, to the Company's knowledge, any of its officers or directors
or any of its employees or stockholders, have taken and will not
take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be
expected to constitute, under the Exchange Act or otherwise, the
stabilization or manipulation of the price of the Common Stock or
Warrants to facilitate the sale or resale of the Securities.
(v) No Finders. Except as described in the Prospectus,
to the knowledge of the Company or the Subsidiary, there are no
claims, payments, issuances, arrangements or understandings for
services in the nature of a finder's or origination fee with
respect to the sale of the Securities hereunder or any other
arrangements, agreements, understandings, counterparts, payments
or issuances of securities with respect to the Company that may
affect the Underwriters' compensation, as determined by the
National Association of Securities Dealers, Inc. ("NASD").
(w) Lock-up Agreements. The Company has obtained from each
director, officer and principal stockholder (someone owning 5% or
more of the Company's Common Stock) of the Company (the "Existing
Shareholders"), a Lock-Up Agreement (as defined in Section 3(o)
hereof) in the form previously delivered.
2. PURCHASE, DELIVERY AND SALE OF UNITS
(a) Purchase Price for Securities. The Securities shall
be sold to and purchased by the Underwriters at the purchase
price of $5.5125 per Share of Common Stock and $0.1125 per
Warrant (that being the public offering price of $6.125 per share
of Common Stock and $0.125 per Public Warrant for an aggregate
public offering price of $6,500,000, less an underwriting
discount of 10 percent) (the "Purchase Price").
(b) Firm Units.
(i) Subject to the terms and conditions of this
Agreement, and on the basis of the representations, warranties
and agreements herein contained the Company agrees to issue and
sell to the Underwriters, severally and not jointly, and the
Underwriters, severally and not jointly, agree to buy from the
Company at the Purchase Price, the number of Securities set forth
opposite each Underwriters' name in Schedule A hereto (the "Firm
Securities").
(ii) Delivery of the Firm Securities against
payment therefor shall take place at the offices of Global
Equities Group, Inc., ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (or at such other place as may be designated by
agreement between you and the Company) at 10:00 a.m., New York
Time, on , 1997, or at such later the and date,
not later than three business days after the Effective Date, as
the parties may mutually agree (such time and date of payment
and delivery for the Firm Securities being herein called the
"First Closing Date"). Time shall be of the essence and delivery
of the Firm Securities at the time and place specified in this
Section 2(b)(ii) is a further condition to the obligations of the
Underwriters hereunder.
(c) Option Securities.
(i) In addition, subject to the terms and
conditions of this Agreement, and on the basis of the
representations, warranties and agreements herein contained, the
Company hereby grants to the Underwriters an option (the
"Over-Allotment Option"), to purchase from the Company all or any
part of an aggregate of an additional 150,000 Shares and 450,000
Warrants at the Purchase Price (the "Option Securities").
(ii) The Over-Allotment Option may be exercised by
the Underwriters, in whole or in part, within forty-five calendar
days after the Effective Date, upon which notice by the
Underwriters to the Company advising it of the number of Option
Securities as to which the Over-Allotment Option is being
exercised, the names and denominating in which the certificates
for the Shares and the Warrants comprising such Option Securities
are to be registered, and the time and date when such
certificates are to be delivered. Such time and date shall be
determined by you but shall not be less than two nor more than
ten business days after exercise of the Over-Allotment Option,
nor in any event prior to the First Closing Date (such time and
date being herein called the "Option Closing Date"). Delivery of
the Option Securities against payment therefor shall take place
at the Global's offices. Time shall be of the essence and
delivery at the time and place specified in this Section 2(e)(ii)
is a further condition to the obligations of the Underwriters
hereunder.
(iii) The Over-Allotment may be exercised only to
cover over-allotments in the sale by the Underwriters of Firm
Securities.
(d) Delivery of Certificates; Payment.
(i) The Company shall make the certificates for the
Shares and the Warrants to be purchased hereunder available to
you for checking at least two full business day prior to the
First Closing Date or the Option Closing Date (each, a "Closing
Date"), as the case may be. The certificates shall be in such
names and denominations as you may request at least two business
days prior to the relevant Closing Date. Time shall be of the
essence and the availability of the certificates at the time and
place specified in this Section 2(d)(i) is a further condition to
the obligations of the Underwriters hereunder.
(ii) On the First Closing Date the Company shall
deliver to you for the several accounts of the Underwriters
definitive engraved certificates in negotiable form representing
all of the Shares and the Warrants to be sold by the Company,
against payment of the Purchase Price therefor by you for the
several account of the Underwriters, by certified or bank
cashier's checks payable in New York Clearing House funds to the
order of the Company.
(iii) In addition, if and to the extent that you
exercise the Over-Allotment Option, then on the Option Closing
Date the Company shall deliver to you or your designees
definitive engraved certificates in negotiable from representing
the Shares and the Warrants comprising the Option Securities to
be sold by the Company, against payment of the Purchase Price
therefor by you or your designees, by certified or bank cashier's
checks payable in next day funds to the order of the Company.
(iv) It is understood that the Underwriters proposes to
offer the Securities to be purchased hereunder to the public,
upon the terms and conditions set forth in the Registration
Statement, after the Registration Statement becomes effective.
3. COVENANTS OF THE COMPANY. The Company covenants and
agrees with the Underwriters that:
(a) Registration.
(i) The Company shall use its reasonable best
efforts to cause the Registration Statement to become effective
and, upon notification from the Commission that the Registration
Statement has become effective, shall so advise you and shall not
at any time, whether before or after the Effective Date, file any
amendment to the Registration Statement or any amendment or
supplement to the Prospectus of which you shall not previously
have been advised and furnished with a copy, or to which you or
Underwriters' Counsel shall have objected in writing, or which is
not in compliance with the Act and the Rules and Regulations.
(ii) Promptly after you or the Company shall
have been advised thereof, you shall advise the Company or the
Company shall advise you, as the case may be, and confirm such
advice in writing, of (A) the receipt of any comments of the
Commission, (B) the effectiveness of any post-effective amendment
to the Registration Statement, (C) the filing of any supplement
to the Prospectus or any amended Prospectus, (D) any request made
by the Commission for amendment of the Registration Statement or
amendment or supplementing of the Prospectus, or for additional
information with respect thereto, or (E) the issuance by the
Commission or any state or regulatory body of any stop order or
other order denying or suspending the effectiveness of the
Registration Statement, or preventing or suspending the use of
any Preliminary Prospectus, or suspending the qualification of
the Securities for offering in any jurisdiction, or otherwise
preventing or impairing the Offering, or the institution or
threat of any proceeding for any of such purposes. The Company
and you shall not acquiesce in such order or proceeding, and
shall instead actively defend such order or proceeding, unless
the Company and you agree in writing to such acquiescence.
(iii) The Company has caused to be delivered to
you copies of each Preliminary Prospectus, and the Company has
consented and hereby consents to the use of such copies for the
purposes permitted by the Act. The Company authorizes the
Underwriters and selected dealers to use the Prospectus in
connection with the sale of the Securities for such period as in
the opinion of Underwriters' Counsel the use thereof is required
to comply with the applicable provisions of the Act and the Rules
and Regulations. In case of the happening, at any time within
such period as a prospectus is required under the Act to be
delivered in connection with sales by an underwriter or dealer,
of any event of which the Company has knowledge and which
materially affects the Company or the Securities, or which in the
opinion of Company Counsel or of Underwriters' Counsel should be
set forth in an amendment to the Registration Statement or an
amendment or supplement to the Prospectus in order to make the
statement made therein not then misleading, in light of the
circumstances existing at the time the Prospectus is required to
be delivered to a purchaser of the Securities, or in case it
shall be necessary to amend or supplement the Prospectus to
comply with the Act or the Rules and Regulations, the Company
shall notify you promptly and forthwith prepare and furnish to
the Underwriters copies of such amended Prospectus or of such
supplement to be attached to the Prospectus, in such quantities
as you may reasonably request, in order that the Prospectus, as
so amended or supplemented, shall not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements in the Prospectus, in
the light of the circumstances under which they are made, not
misleading. The preparation and furnishing of each such
amendment to the Registration Statement, amended Prospectus or
supplement to be attached to the Prospectus shall be without
expense to the Underwriters.
(iv) The Company shall use its reasonable best
efforts to deliver to you at or before the First Closing Date two
signed copies of the Registration Statement including all
financial statements and exhibits filed therewith, and of all
amendments thereto.
The Company shall use its reasonable best efforts to deliver
to or upon your order, from time to time until the Effective Date
as many copies of any Preliminary Prospectus filed with the
Commission prior to the Effective Date as the Underwriters may
reasonably request. The Company shall use its reasonable best
efforts to deliver to you on the Effective Date and thereafter
for so long as a Prospectus is required to be delivered under the
Act, from time to time, as many copies of the Prospectus, in
final form, or as thereafter amended or supplemented, as the
Underwriters may from time to time reasonably request.
(v) The Company shall comply with the Act, the
Rules and Regulations, and the Securities Exchange Act of 1934
(the "Exchange Act"), and the rules and regulations promulgated
thereunder in connection with the offering and issuance of the
Securities in all material respects.
(b) Blue Sky. The Company shall, at its own expense,
use its best efforts to assist the Underwriter in qualifying or
registering the Securities for sale (or obtaining an exemption
from registration) under the securities or "blue sky" laws of
such jurisdictions as you may designate, and shall furnish such
information to Underwriters' Counsel as may be required for that
purpose, and shall comply with such laws; provided, however, that
the Company shall not be required to qualify as a foreign
corporation or a dealer in securities or to execute a general
consent to service of process in any jurisdiction in any action
other than one arising out of the offering or sale of the
Securities. The Company shall bear all of the expense of such
qualifications and registrations, including without limitation
the legal fees and disbursements of Underwriters' Counsel, which
fees, exclusive of disbursements, shall equal $35,000, $15,000 of
which is due and payable upon commencement of filing. After each
Closing Date the Company shall, at its own expense, from time to
time prepare and file such statements and reports as may be
required to continue each such qualification (or maintain such
exemption from registration) in effect for so long a period as
required by law, regulation or administrative policy in
connection with the offering of the Securities.
(c) Exchange Act Registration. The Company shall at
its own expense, prepare and file with the Commission a
registration statement (on Form 8-A or Form 10) under section 12
of the Exchange Act, and shall use its best efforts to cause such
registration statement to be declared effective by the Commission
on an accelerated basis on the Effective Date and maintained in
effect for at least five years from the Effective Date.
(d) Prospectus Copies. The Company shall deliver to
you on or before the First Closing Date a copy of the
Registration Statement including all financial statements,
schedules and exhibits filed therewith, and of all amendments
thereto. The Company shall deliver to or on the order of the
Underwriters, from time to time until the Effective Date, as
many copies of any Preliminary Prospectus filed with the
Commission prior to the Effective Date as the Underwriters may
reasonably request. The Company shall deliver to the Underwriters
on the Effective Date, and thereafter for so long as a prospectus
is required to be delivered under the Act, from time to time, as
many copies of the Prospectus, in final form, or as thereafter
amended or supplemented, as the Underwriters may from time to
time reasonably request.
(e) Amendments and Supplements. The Company shall,
promptly upon your request, prepare and file with the Commission
any amendments to the Registration Statement, and any amendments
or supplements to the Preliminary Prospectus or the Prospectus,
and take any other action which in the reasonable opinion of
Underwriters' Counsel and Company Counsel may be reasonably
necessary or advisable in connection with the distribution of the
Securities, and shall use its best efforts to cause the same to
become effective as promptly as possible.
(f) Certain Market Practices. The Company has not
taken, and shall not take, directly or indirectly, any action
designed, or which might reasonably be expected, to cause or
result in, or which has constituted, the stabilization or
manipulation of the price of the Securities to facilitate the
sale or resale thereof.
(g) Certain Representations. Neither the Company nor
any representative of the Company has made or shall make any
written or oral representation in connection with the Offering
and sale of the Securities or the Underwriters' Warrants which is
not contained in the Prospectus, which is otherwise inconsistent
with or in contravention of anything contained in the Prospectus,
or which shall constitute a violation of the Act, the Rules and
Regulations, the Exchange Act or the rules and regulations
promulgated under the Exchange Act.
(h) Continuing Registration of Warrants and Underlying
Common Stock. For so long as any Warrant is outstanding, the
Company shall, at its own expense: (i) use its reasonable best
efforts to cause post-effective amendments to the Registration
Statement, or new registration statements relating to the
Warrants and the Common Stock underlying the Warrants to become
effective in compliance with the Act and without any lapse of
time between the effectiveness of the Registration Statement and
of any such post-effective amendment or new registration
statement; provided, however, that the Company shall have no
obligation to maintain the effectiveness of such Registration
Statement or file a new Registration Statement, or to keep
available a prospectus at any time at which such registration or
prospectus is not then required; (ii) cause a copy of each
Prospectus, as then amended, to be delivered to each holder of
record of a Warrant; (iii) furnish to the Underwriters and
dealers as many copies of each such Prospectus as the
Underwriters or dealers may reasonably request; and (iv) maintain
the "blue sky" qualification or registration of the Warrants and
the Common Stock underlying the Warrants, or have a currently
available exemption therefrom, in each jurisdiction in which the
Securities were so qualified or registered for purposes of the
Offering.
(i) Use of Proceeds. The Company shall apply the net
proceeds from the sale of the Securities substantially for the
purposes set forth in the Prospectus under the caption "USE OF
PROCEEDS," and shall file such reports with the Commission with
respect to the sale of the Securities and the application of the
proceeds therefrom as may be required pursuant to Rule 463 of the
Rules and Regulations.
(j) Twelve Months' Earnings Statement. The Company
shall make generally available to its security holders and
deliver to you as soon as it is practicable so to do, but in no
event later than ninety days after the end of twelve months after
the close of its current fiscal quarter, an earnings statement
(which need not be audited) covering a period of at least twelve
consecutive months beginning after the Effective Date, which
shall satisfy the requirements of section 1 (a) of the Act.
(k) NASDAQ Exchange Listings, Etc. The Company shall
immediately make available to the Underwriter all necessary
documents and expenses required by the Underwriter in connection
with the Underwriter's making of all filings required to seek
approval for the quotation of the Securities on the NASDAQ
SmallCap Market ("NASDAQ"). The Company shall use its best
efforts to effect and maintain such approval for at least five
years from the Effective Date, unless the Securities become
listed on the NASDAQ National Market System.
(l) Board of Directors. For a period of three (3)
years from the Effective Date, the Company shall nominate and use
its best efforts to engage a designee of Global as a nonvoting
advisor to the Company's Board of Directors (the "Advisor") or,
in lieu thereof at the discretion of Global, to designate an
individual for election as a director, in which case the Company
shall use its best efforts to have such individual elected as a
director. The designee may be a director, officer, partner,
employee or affiliate of an Underwriter, and Global shall
designate such person in writing to the Board. In the event
Global shall not have designated such individual at the time of
any meeting of the Board or such person is unavailable to serve,
the Company shall notify Global of each meeting of the Board. An
individual, if any, designated by Global shall receive all
notices and other correspondence and communications sent by the
Company to members of the Board. Such Advisor shall be entitled
to receive reimbursement for all reasonable costs incurred in
attending such meetings including, but not limited to, food,
lodging, and transportation. In addition, such Advisor shall be
entitled to the same compensation as the Company gives to other
non-employee directors for acting in such capacity. The Company
further agrees that, during said three (3) year period, it shall
schedule no less than four (4) formal and "in person" meetings of
its Board of Directors in each such year at which meetings such
Advisor shall be permitted to attend as set forth herein; said
meetings shall be held quarterly each year and thirty (30) days
advance notice of such meetings shall be given to the Advisor.
Further, during such three (3) year period, the Company shall
give notice to Global with respect to any proposed acquisitions,
mergers, reorganizations or other transactions.
The Company agrees to indemnify and hold harmless the
Underwriters and the Advisor, subject to applicable law against
any and all claims, actions, damages, costs and expenses, and
judgments arising solely out of the attendance and participation
of the Advisor at any such meeting described herein. In the
event the Company maintains a liability insurance policy
affording coverage for the acts of its officers and directors, it
agrees, if possible, to include the Advisor as an insured under
such policy.
(m) Periodic Reports. For so long as the Company is a
reporting company under section 12(g) or section 15(d) of the
Exchange Act, the Company shall, at its own expense, hold an
annual meeting of stockholders for the election of directors
within 180 days after the end of each of the Company's fiscal
years and, within 150 days after the end of each of the Company's
fiscal years, and furnish to its stockholders an annual report
(including financial statements audited by certified public
accountants) in reasonable detail. In addition, during the
period ending five years from the date hereof, the Company shall,
at its own expense, furnish to you: (i) within 90 days of the end
of each fiscal year, a balance sheet of the Company as at the end
of such fiscal year, together with statements of income,
stockholders' equity and cash flows of the Company as at the end
of such fiscal year, all in reasonable detail and accompanied by
a copy of the certificate or report thereon of certified public
accountants; (ii) as soon as they are available, a copy of all
reports (financial or otherwise) distributed to security holders;
(iii) as soon as they are available, a copy of all
non-confidential reports and financial statements furnished to or
filed with the Commission; and (iv) such other non-confidential
information as you may from time to time reasonably request. The
financial statements reflected to herein shall be on a
consolidated basis to the extent the accounts of the Company are
consolidated in reports furnished to its stockholders generally.
(n) Agreements with Stockholders, Directors and
Officers. The Company shall cause each of the Company's existing
principal stockholders (those owning more than 5% of the
Company's outstanding Common Stock), directors and officers to
enter into written agreements with Global (the "Lock-up
Agreements") prior to the Effective Date, that, for a period of
twelve (12) months from the Effective Date, they will not,
without the consent of Global, (i) publicly sell any securities
of the Company owned directly or indirectly by them or owned
beneficially by them (as defined in the Exchange Act), or (ii)
otherwise sell, or transfer such securities unless the transferee
agrees in writing to be bound by an identical lock-up.
(o) Available Shares. The Company shall reserve and
at all times keep available the maximum number of its authorized
but unissued shares of Common Stock which are issuable upon
exercise of the Warrants, the Underwriters' Warrant, and the
Warrants issuable upon exercise of the Underwriters' Warrant, in
each case taking into account the antidilution provisions
thereof. The Company shall reserve and at all times keep
available the maximum number of its authorized but unissued
shares of Common Stock which are issuable upon conversion of (i)
the Common Stock issuable upon exercise of the Warrants; (ii) the
Common Stock issuable upon exercise of the Underwriters'
Warrants; and (iii) the Common Stock issuable upon exercise of
the Warrants issuable upon exercise of the Underwriters'
Warrants.
(p) Management. On each Closing Date, the officers of
the Company shall be as set forth in the Prospectus.
(q) Stock Transfer Sheets. The Company shall instruct
its Transfer Agent (as defined in Section 4(i) hereto) to deliver
to you copies of all advice sheets showing the daily transfer of
the outstanding shares of Common Stock and Warrants sold by the
Company in the public offering and shall, at its own expense,
furnish you weekly for one year following the First Closing Date
with Depository Trust Company stock transfer sheets.
(r) Bound Volumes. Within a reasonable time after the
First Closing Date, the Company shall deliver to you, at the
Company's expense, three bound volumes in form and content
acceptable to the Underwriters, containing the Registration
Statement and all exhibits filed therewith and all amendments
thereto, and all other agreements, correspondence, filings,
certificates and other documents filed and/or delivered in
connection with the Offering.
(s) Warrant Solicitation Fee. The Company agrees to
pay Global or a fee equal to the maximum percentage permitted by
the NASD of the aggregate exercise price of the Warrants if: (i)
the market price of the Common Stock is greater than the exercise
price of the Warrants on the date of exercise; (ii) the exercise
of the Warrants are solicited by a member of the NASD and the
customer states in writing that the transaction was solicited and
designates in writing the broker-dealer to receive compensation
for the exercise; (iii) the Warrants are not held in a
discretionary account; (iv) the disclosure of compensation
arrangements was made both at the time of the Offering and at the
time of the exercise of the Warrant; and (v) the solicitation of
the Warrant is not in violation of Regulation M promulgated under
the Exchange Act. The Company agrees not to solicit the exercise
of any Warrants other than through Global or
_____________________ and will not authorize any other dealer to
engage in such solicitation without the prior written consent of
the Underwriters which will not be unreasonably withheld. The
Warrant solicitation fee will not be paid in a non-solicited
transaction. No Warrant solicitation by the Underwriters will
occur prior to one year from the Effective Date.
(t) Anti-Dilution. For a period of two years from the
Effective Date, the Company shall not issue any shares of Common
Stock or any warrants, options or other rights to purchase Common
Stock (other than securities issued under the Company's stock
option plan or in connection with acquisitions which are
non-dilutive to the public shareholders without the prior written
consent of the Underwriter.]
(u) Intentionally left blank.
(v) Due Diligence. The Company agrees to engage and pay
for; on the Underwriter's behalf (i) an investigative search of
the Underwriter's choice (whose charges shall not exceed $5,000)
to conduct an investigation of the principals of the Company
mutually selected by the Underwriter and the Company; and (ii) a
consultant to be mutually selected by the Underwriter and the
Company who is expert in the industry in which the Company does
business to analyze the Company's prospects and respond to the
Underwriter's questions and concerns.
(w) Public Relations Firm. The Company, by signing this
letter, agrees that it will engage a financial public relations
firm, satisfactory to the Underwriter, if requested by the
Underwriter, no later than the date of the initial filing of the
Registration Statement contemplated hereby.
4. CONDITIONS TO UNDERWRITERS' OBLIGATIONS. The
obligations of the Underwriters to purchase and pay for the
Securities which you have agreed to purchase hereunder are
subject to the accuracy (as of the date hereof and as of each
Closing Date) of and compliance with the representations and
warranties of the Company contained herein, the performance by
the Company of all of their respective obligations hereunder and
the following further conditions:
(a) Effective Registration Statement, No Stop Order.
The Registration Statement shall have become effective and you
shall have received notice thereof not later than 6:00 p.m., New
York time, on the date of this Agreement, or at such later time
or on such later date as to which you may agree in writing. In
addition, on each Closing Date (i) no stop order denying or
suspending the effectiveness of the Registration Statement shall
be in effect, and no proceedings for that or any similar purpose
shall have been instituted or shall be pending or, to your
knowledge or to the knowledge of the Company, shall be
contemplated by the Commission, and (ii) all requests on the part
of the Commission for additional information shall have been
complied with to the reasonable satisfaction of Underwriters'
Counsel.
(b) Opinion of Company Counsel. On the First Closing
Date, you shall have received the opinion, dated as of the First
Closing Date, of ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., Counsel for the
Company, in form and substance satisfactory to the Underwriters'
Counsel, to the effect that:
(i) The Company and its Subsidiary are duly
qualified to do business as domestic or foreign corporations and
are in good standing in all jurisdictions in the United States,
if any, in which the ownership or leasing of their properties or
the conduct of their business requires such qualification, except
where the failure so to qualify would not have a material adverse
effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company or its
Subsidiary;
(ii) The Registration Statement has become
effective under the Act and, to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for
that purpose have been instituted or are pending or threatened
under the Act;
(iii) The Registration Statement and the
Prospectus, and each amendment or supplement thereto (other than
the financial statements, social data and supporting schedules
included therein, as to which such counsel need express no
opinion) as of the Effective Date, complied as to form in all
material respects with the requirements of the Act and the
Regulations;
(iv) The terms and provisions of the capital stock
of the Company, and all warrants and options issued by the
Company and currently outstanding conform in all material
respects to the description thereof contained in the Registration
Statement and Prospectus;
(v) The information in the Prospectus under the
caption "Description of Securities," to the extent that it
constitutes matters of law or legal conclusions, has been
reviewed by such counsel and is correct;
(vi) The description in the Registration Statement
and the Prospectus of the charter and bylaws of the Company and
of statutes and contracts are accurate in all material respects
and fairly present in all material respects the information
required to be presented by the Act and the Regulations;
(vii) To the best knowledge of such counsel, there
are no agreements, contracts, licenses, leases or documents of a
character required to be described or referred to in the
Registration Statement or Prospectus or to be filed as an exhibit
to the Registration Statement that are not described or referred
to therein and filed as required;
(viii) The performance of this Agreement, the
Warrant Agreement and the Underwriters' Warrants and the
consummation of the transactions contemplated thereby will not
result in the breach or violation of any of the terms and
provisions of the Company's Articles of Incorporation or By-laws,
or to the best of such counsel's knowledge, result in the breach
or violation of any of the terms and provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement, bond,debenture, note agreement or other evidence of
indebtedness, or any lease, license, contract or other agreement
or instrument known to such counsel to which the Company or its
Subsidiary are parties or by which any of their properties are
bound, or to the best of such counsel's knowledge (other than
performance of the Company's indemnification and contribution
obligations under such agreements, concerning which no opinion
need be expressed), any applicable statute, rule or regulation
or, to its knowledge, any order, writ or decree of any court or
governmental agency or body having jurisdiction over the Company
or its Subsidiary or over any of their properties or operations;
(ix) No authorization, approval or consent of any
governmental authority or agency of the United States of America
is necessary in connection with the consummation of the
transactions contemplated by this Agreement, the Warrant
Agreement and the Underwriters' Warrants, except such as have
been obtained under the Act or such as may be required under
state securities or Blue Sky laws in connection with the purchase
and the distribution of the Securities by the Underwriters;
(x) To the best knowledge of such counsel, there
are no legal or governmental proceedings pending or threatened
against the Company or its Subsidiary of a character which are
required to be disclosed in the Registration Statement or the
Prospectus by the Act or the Regulations, other than those
described therein;
(xi) To the best knowledge of such counsel,
neither the Company nor its Subsidiary are presently in breach
of, or in default under, any bond, debenture, note or other
evidence of indebtedness or any contract, indenture, mortgage,
deed of trust, loan agreement, lease, license or other agreement
or instrument to which the Company or its Subsidiary are a party
or by which any of their properties are bound which is material
to the financial condition, earnings, operations, business or
business prospects of the Company or its Subsidiary;
(xii) To the best knowledge of such counsel, there
are no formal investigations presently being conducted by any
United States securities exchange, or the securities exchange of
any foreign country, the National Association of Securities
Dealers, Inc., the United States Securities and Exchange
Commission or the securities commission of any state of the
United States or any foreign country, involving the conduct of
the Company;
(xiii) To the best knowledge of such counsel, except
as set forth in the Registration Statement and Prospectus, no
holders of Shares or other securities of the Company have
registration rights with respect to securities of the Company
and, except as set forth in the Registration Statement and
Prospectus, all holders of securities of the Company having
rights to registration of such Shares, or other securities,
because of the filing of the Registration Statement by the
Company have, with respect to the offering contemplated hereby,
waived such rights or such rights have expired by reason of lapse
of time following notification of the Company's intent to file
the Registration Statement, or have included securities in the
Registration Statement pursuant to the exercise of such rights;
and
(xiv) The Consent to Jurisdiction clause of Section
16 of the Agreement is valid and binding upon the Company.
(xv) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus under the
caption "Capitalization" as of the dates stated therein; the
issued and outstanding shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid
and nonassessable and have not been issued in violation of any
preemptive right, co-sale right, right of first refusal or other
similar right;
(xvi) The Shares and Warrants will be, upon
issuance and delivery against payment therefor in accordance with
the terms of this Agreement, duly authorized and validly issued
and fully paid and nonassessable, and will not have been issued
in violation of any preemptive right, registration right, co-sale
right, right of first refusal or other similar right;
(xvii) The Company has corporate power and authority
to enter into this Agreement, the Warrant Agreement and the
Underwriters' Warrants and to issue, sell and deliver the Shares
and Warrants to the Underwriters;
(xviii) The Agreement, the Warrant Agreement and the
Underwriters' Warrants have been duly authorized by all necessary
corporate action on the part of the Company and have been duly
executed and delivered by the Company and, assuming due
authorization, execution and delivery by you, are the valid and
binding agreements of the Company, except insofar as the
indemnification and contribution provisions of such agreements
may be limited by public policy concerns, and except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or laws affecting creditors' rights
generally or by general equitable principles;
(xix) The Warrants and the Underwriters' Warrants
have been duly and validly authorized and constitute valid and
binding obligations of the Company in accordance with their
terms; the Shares underlying the Warrants (including the
Underwriters' Warrants) have been duly and validly authorized for
issuance upon exercise of the Warrants, and when so issued will
be validly issued, fully paid and non-assessable; and no
stockholder has any preemptive rights with respect to the
Warrants or the underlying Shares;
In addition, such counsel shall state that such counsel has
participated in conferences with officials and other
representatives of the Company, the Underwriters, Underwriters'
Counsel and the independent public accountants of the Company, at
which conferences the contents of the Registration Statement and
the Prospectus and related matters were discussed, and although
they have not independently checked or verified the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, nothing has come to the
attention of such counsel that caused them to believe that, on
the Effective Date the Registration Statement (except as to
financial statements, financial data and supporting schedules
contained therein, as to which such counsel need express no
opinion) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or at
the Closing Dates, the Prospectus (except as aforesaid) contained
any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading.
Counsel rendering the foregoing opinion may rely as to
questions of fact upon representations or certificates of
officers of the Company, and of governmental officials, in which
case their opinion is explicitly to state they are so relying
thereon and that they have no knowledge of any material
misstatement or inaccuracy in such opinions, representations or
certificate. Copies of any opinion, representation or
certificate so relied upon shall be delivered to you and to
Underwriters' counsel.
(c) Corporate Proceedings. All corporate proceedings
and other legal matters relating to this Agreement, the
Registration Statement, the Prospectus and other related matters
shall be reasonably satisfactory to or approved by Underwriters'
Counsel.
(d) Comfort Letter. Prior to the Effective Date, and
again on and as of the First Closing Date, you shall have
received a letter from J.R. ▇▇▇▇, P.A. CPA, certified public
accountants for the Company, satisfactory in form and substance
to the Underwriters' Counsel.
(e) Bring Down. At each of the Closing Dates, (i) the
representations and warranties of the Company contained in this
Agreement shall be true and correct with the same effect as if
made on and as of such Closing Date, and the Company shall have
performed all of its obligations hereunder and satisfied all the
conditions to be satisfied at or prior to such Closing Date; (ii)
the Registration Statement and the Prospectus shall contain all
statements which are required to be stated therein in accordance
with the Act and the Rules and Regulations, and shall in all
material respects conform to the requirements of the Act and the
Rules and Regulations, and neither the Registration Statement nor
the Prospectus shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated or
which they were made, not misleading; (iii) there shall have
been, since the respective dates as of which information is
given, no material adverse change in the business, property,
operations, condition (financial or otherwise), earnings, capital
stock, long-term or short-term debt or general affairs of the
Company from that set forth in the Registration Statement and the
Prospectus, except changes which the Registration Statement and
Prospectus indicate might occur after the Effective Date, and the
Company shall not have incurred any material liabilities nor
entered into any material agreement other than as referred to in
the Registration Statement and Prospectus; and (iv) except as set
forth in the Prospectus, no action, suit or proceeding shall be
pending or threatened against the Company before or by any
commission, board or administrative agency in the United States
or elsewhere, wherein an unfavorable decision, ruling or finding
would materially adversely affect the business, property,
operations, condition (financial or otherwise), earnings or
general affairs of the Company. In addition, you shall have
received, at the First Closing Date, a certificate signed by the
principal executive officer and by the principal financial
officer of the Company, dated as of the First Closing Date,
evidencing compliance with the provisions of this Section 4(h).
(f) Transfer and Warrant Agent. On or before the
Effective Date, the Company shall have appointed a mutually
acceptable transfer agent, as its transfer agent and warrant
agent ("Transfer Agent") to transfer all of the shares of Common
Stock and Warrants issued in the Offering, as well as to transfer
other shares of the Common Stock outstanding from time to time.
(g) NASD Approval Of Underwriters' Compensation. By
the Effective Date, the Underwriters shall have received
clearance from the NASD as to the amount of compensation
allowable or payable to the Underwriters, as described in the
Registration Statement.
(h) Certain Further Matters. On each Closing Date,
Underwriters' Counsel shall have been furnished with all such
other documents and certificates as they may reasonably request
for the purpose of enabling them to render their legal opinion to
the Underwriters and in order to evidence the accuracy and
completeness of any of the representations, warranties or
statements, the performance of any of the covenants, or the
fulfillment of any of the conditions, herein contained.
(i) All proceedings taken in connection with the
authorization, issuance or sale of the Securities, as herein
contemplated shall be reasonably satisfactory in form and
substance to the Underwriters and to Underwriters' Counsel;
(ii) On each Closing Date there shall have been
duly tendered to you for your account the appropriate number of
Securities;
(iii) No order suspending the sale of the
Securities in any jurisdiction designated by you pursuant to
Section 3(b) hereof shall have been issued on either Closing
Date, and no proceedings for that purpose shall have been
instituted or, to the knowledge of the Underwriters or the
Company, shall be contemplated;
(iv) Prior to each Closing Date there shall not
have been received or provided by the Company's independent
public accountants or attorneys, qualifications to the effect of
either difficulties in furnishing certifications as to material
items including, without limitation, information contained within
the footnotes to the financial statements, or as affecting
matters incident to the issuance and sale of the Securities or as
to corporate proceedings or other matters;
(v) On or prior to the First Closing Date, the
Underwriters' Warrants and the Warrant Agreement shall have been
executed and delivered by the Company, and the Lock-Up Agreements
shall have been executed and delivered by all of the Company's
officers, directors and principal stockholders, to the
Underwriters.
(i) Additional Conditions. Upon exercise of the
Over-Allotment Option, the Underwriters' obligations to purchase
and pay for the Option Securities shall be subject (as of the
date hereof and as of the Option Closing Date) to the following
conditions:
(i) The Registration Statement shall remain
effective at the Option Closing Date, no stop order denying or
suspending the effectiveness thereof shall have been issued, and
no proceedings for that or any similar purpose shall have been
instituted or shall be pending or, to your knowledge or the
knowledge of the Company, shall be contemplated by the
Commission, and all reasonable requests on the part of the
Commission for additional information shall have been complied
with to the satisfaction of Underwriters' Counsel.
(ii) On the Option Closing Date there shall have
been delivered to you a signed opinion of Company Counsel, dated
as of the Option Closing Date, in form and substance satisfactory
to Underwriters' Counsel, which opinion shall be substantially
the same in scope and substance as the opinion furnished to you
on the First Closing Date pursuant to Section 4(b), (c), (d) and
(e), respectively, except that such opinion, where appropriate,
shall cover the Option Securities rather than the ▇▇▇▇
Securities. If the First Closing Date is the same as the Option
Closing Date, such opinions may be combined.
(iii) All proceedings taken at or prior to the
Option Closing Date in connection with the sale and issuance of
the Option Securities shall be satisfactory in form and substance
to you, and you and Underwriters' Counsel shall have been
furnished with all such documents, certificates and opinions as
you may reasonably request in connection with this transaction in
order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company or its
compliance with any of the covenants or conditions contained
herein.
(iv) On the Option Closing Date there shall have
been delivered you a letter in form and substance satisfactory to
the Underwriters from J.R. ▇▇▇▇, P.A. CPA, dated the Option
Closing Date addressed to you, confirming the information in
their letter referred to in Section 4(g) as of the date thereof
and stating that, without any additional investigation required,
nothing has come to their attention during the period from the
ending date of their review referred to in such letter to a date
not more than five banking days prior to the Option Closing Date
which would require any change in such letter if it were required
to be dated the Option Closing Date.
Any certificate signed by any officer of the Company and
delivered to the Underwriters or to Underwriters' Counsel shall
be deemed a representation and warranty by the Company to the
Underwriters as to the statements made therein. If any of the
conditions herein provided for in this Section shall not have
been completely fulfilled as of the date indicated, this
Agreement and all obligations of the Underwriters under this
Agreement may be cancelled at, or at any time prior to, each
Closing Date by your notifying the Company of such cancellation
in writing or by telecopy at or prior to the applicable Closing
Date. Any such cancellation shall be without liability of any
Underwriter to the Company, except as otherwise provided herein.
5. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company to sell and deliver the Securities are
subject to the following conditions:
(a) Effective Registration Statement. The
Registration Statement shall have become effective not later than
6:00 p.m. New York time, on the date of this Agreement, or at
such later time or on such later date as the Company and you may
agree in writing.
(b) No Stop Order. On the applicable Closing Date, no
stop order denying or suspending the effectiveness of the
Registration Statement shall have been issued under the Act or
any proceedings therefor initiated or threatened by the
Commission.
(c) Payment for Securities. On the applicable Closing
Date, you shall have made payment, for the several accounts of
the Underwriters, of the aggregate Purchase Price for the
Securities then being purchased by certified or bank cashier's
checks payable in next day funds to the order of the Company.
If the conditions to the obligations of the Company provided
by this Section 5 have been fulfilled on the First Closing Date
but are not fulfilled after the First Closing Date and prior to
the Option Closing Date, then only the obligation of the Company
to sell and deliver the Option Securities upon exercise of the
Over-Allotment Option shall be affected.
6. REPRESENTATION OF UNDERWRITERS. The Underwriter's
counsel shall make all required filings with the NASD with
respect to the proposed public offering of the Shares. In this
regard, the Company shall supply to the Underwriter's counsel,
one complete copy of the Registration Statement, give separate
copies each of the Preliminary Prospectus and the Underwriting
Documents for filing with the NASD and the various Blue Sky
commissions, accompanied with a certified or cashier's check in
the appropriate amount payable to the NASD and the respective
state Blue Sky commissions. Additionally, the Company shall
supply the Underwriter's counsel, no later than one week before
the expected filing date of the Registration Statement, a written
representation as to (a) the existence or nonexistence of any
NASD affiliation or association of any officer, director, or
shareholder of unregistered securities of the Company (b) whether
or not any unregistered securities of the Company have been
acquired by the NASD affiliated person during the 12-month period
prior to filing the Registration Statement, and (c) whether or
not key-man insurance has been provided for any officer of the
Company by an NASD affiliate. The text of the Prospectus, the
Registration Statement, and all other documents filed with the
Commission pursuant to the requirements of the Securities Act of
1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act") shall conform to the
requirements of the Securities Act in all material respects and
shall be in form and content satisfactory to counsel for matters
which relate to the public offering and other related
transactions shall be satisfactory in all material respects to
the Underwriter's counsel.
7. INDEMNIFICATION.
(a) Indemnification by the Company. As used in this
Agreement, the term "Liabilities" shall mean any and all losses,
claims, damages and liabilities, and actions and proceedings in
respect thereof (including without limitation all reasonable
costs of defense and investigation and all attorneys' fees)
including without limitation those asserted by any party to this
Agreement against any other party to this Agreement. The Company
hereby indemnifies and holds harmless the Underwriters and each
person, if any, who controls the Underwriters within the meaning
of the Act, from and against all Liabilities, joint or several,
to which the Underwriters or such controlling person may become
subject, under the Act or otherwise, insofar as such Liabilities
arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of any material fact, in light of the
circumstances in which it was made, contained in (A) the
Registration Statement or any amendment thereto, or the
Prospectus or any Preliminary Prospectus, or any amendment or
supplement thereto, or (B) any "blue sky" application or other
document executed by the Company specifically for that purpose,
or based upon written information furnished by the Company, filed
in any state or other jurisdiction in order to qualify any or all
of the Securities under the securities laws thereof (any such
application, document or information being herein called a "Blue
Sky Application"); or (ii) the omission or alleged omission to
state in the Registration Statement or any amendment thereto, or
the Prospectus or any Preliminary Prospectus, or any amendment or
supplement thereto, or in any Blue Sky Application, a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which it was
made, not misleading; provided, however, that the Company shall
not be liable in any such case to the extent, but only to the
extent, that any such Liabilities arise out of or are based upon
an untrue statement or alleged untrue statement or omission or
alleged omission (x) made in reliance upon and in conformity with
written information furnished to the Company through you by or on
behalf of the Underwriters specifically for use in the
preparation of the Registration Statement or any such amendment
thereto, or the Prospectus or any such Preliminary Prospectus, or
any such amendment or supplement thereto, or any such Blue Sky
Application or (y) corrected by the final Prospectus and the
failure of the Underwriters to deliver the final Prospectus. The
foregoing indemnity shall be in addition to any other liability
which the Company may otherwise have.
(b) Indemnification by Underwriters. The
Underwriters, severally and not jointly, hereby indemnify and
hold harmless the Company, each of its directors, each nominee
(if any) for director named in the Prospectus, each of its
officers who have signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of
the Act, from and against all Liabilities to which the Company or
any such director, nominee, officer or controlling person may
become subject under the Act or otherwise, insofar as such
Liabilities arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto,
or the Prospectus or any Preliminary Prospectus, or any amendment
or supplement thereto, or (ii) the omission or the alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent,
that any such Liabilities arise out of or are based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or any
amendment thereto, or the Prospectus or any Preliminary
Prospectus, or any amendment or supplement thereto, in reliance
upon and in conformity with written information furnished to the
Company through you, by or on behalf of such Underwriters,
specifically for use in the preparation thereof. In no event
shall any Underwriter be liable under this Section 7(b) for any
amount in excess of the compensation received by such
Underwriters, in the form of underwriting discounts or otherwise,
pursuant to this Agreement or any other agreement contemplated
hereby. The foregoing indemnity shall be in addition to any
other liability which any Underwriter may otherwise have.
(c) Procedure. Promptly after receipt by an
indemnified party under this Section 6 of notice of the
commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying
party under this Section 6, notify in writing the indemnifying
party of the commencement thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under
this Section 7 unless the rights of the indemnifying party have
been prejudiced by such omission or delay. In case any such
action is brought against any indemnified party and it notifies
the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to
the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, subject
to the provisions hereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 6 for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs
of investigation. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in
the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with
counsel reasonably satisfactory to the indemnified party;
provided, however, that the fees and expenses of such counsel
shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in
writing by the indemnifying party, or (ii) the named parties to
any such action (including any impleaded parties) include both
such indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may
be legal defenses available to it which are different from or in
addition to those available to the indemnifying party or that the
indemnified and
indemnifying party have conflicting interests which would make it
inappropriate for the same counsel to represent both of them (in
which case the indemnifying party shall into have the right to
assume the defense of such action on behalf of the indemnified
party, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one
separate form of attorneys). No settlement of any action against
an indemnified party shall be made without the consent of the
indemnified party, which shall not be unreasonably withheld in
light of all factors of importance to such indemnified party.
8. CONTRIBUTION. In order to provide for just and
equitable contribution under the Act in any case in which (a) any
indemnified party makes claims for indemnification pursuant to
Section 7 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right
of appeal) that such indemnification may not be enforced in such
case, notwithstanding the fact that the express provisions of
Section 7 provide for indemnification in such case, or (b)
contribution under the Act may be required on the part of any
indemnified party, then such indemnified party and each
indemnifying party (if more than one) shall contribute to the
aggregate Liabilities to which it may be subject, in either such
case (after contribution from others) in such proportions that
the Underwriters are responsible in the aggregate for the portion
of such Liabilities represented by the percentage that the
underwriting discount per Unit appearing on the cover page of the
Prospectus bears to the Public Offering price per Unit appearing
thereon, and the Company shall be responsible for the remaining
portion; provided, however, that if such allocation is not
permitted by applicable law, then the relative fault of the
Company, and the Underwriters in connection with the statements
or omissions which resulted in such Liabilities and other
relevant equitable considerations shall also be considered. The
relative fault shall be determined by reference to, among other
things, whether in the case of an untrue statement of material
fact or the omission to state a material fact, such statement or
omission relates to information supplied by the Company, or the
Underwriters, and the parties' relative intent, knowledge, access
to information and opportunity to collect or prevent such untrue
statement or omission. The Company and the Underwriters agree
that it would not be just and equitable if the respective
obligations of the Company, and the Underwriters to contribute
pursuant to this Section 8 were to be determined by pro rata or
per capita allocation of the aggregate Liabilities or by any
other method of allocation that does not take account of the
equitable considerations referred to in the first sentence of
this Section 8. Moreover, the contribution of any Underwriter
shall not be in excess of the cash compensation received by the
Underwriter, in the form of underwriting discounts or otherwise,
pursuant to this agreement or any other agreement contemplated
hereby. No person guilty of a fraudulent misrepresentation
(within the meaning of Section 11 (f) of the Act) shall be
entitled to contribution from any person who is not guilty of
such fraudulent misrepresentation. As used in this Section 8,
the term "Company" shall include any officer, director or person
who controls the Company within the meaning of section 15 of the
Act. If the full amount of the contribution specified in this
Section 7 is not permitted by law, then each indemnified party
and each person who controls an indemnified party shall be
entitled to contribution from each indemnifying party to the full
extent permitted by law. The foregoing contribution agreement
shall in no way affect the contribution liabilities of any
persons having liability under section 11 of the Act other than
the Company and the Underwriters. No contribution shall be
requested with regard to the settlement of any matter from any
party who did not consent to the settlement; provided, however,
that such consent shall not be unreasonably withheld in light of
all factors of importance to such party.
9. COSTS AND EXPENSES.
(a) Certain Costs and Expenses. Whether or not this
Agreement becomes effective or the sale of the Securities to the
Underwriters is consummated, the Company shall pay all costs and
expense incident to the issuance, offering, sale and delivery of
the Shares and the Warrants and the performance of its
obligations under this Agreement, including without limitation:
(i) all fees and expenses of the Company's legal counsel and
accountants; (ii) all costs and expenses incident to the
preparation, printing, filing and distribution of the
Registration Statement (including the financial statements
contained therein and all exhibits and amendments thereto), each
Preliminary Prospectus and the Prospectus, each as amended or
supplemented, this Agreement and the other underwriting
documents, as well as the other agreements and documents referred
to herein and the Blue Sky Memorandum; each in such quantities as
you shall deem necessary; (iii) all fees of NASD required in
connection with the filing required by NASD to be made by the
Underwriters with respect to the Offering; (iv) all expenses,
including fees (but not in excess of the amount set forth in
Section 3(b) and disbursements of Underwriters' Counsel in
connection with the qualification of the Securities under the
"blue sky" laws which you shall designate; (v) a fee of $15,000
to be paid to Underwriters' Counsel for the preparation of a
secondary trading memorandum; (vi) all costs and expenses of
printing the respective certificates representing the Shares and
the Warrants; (vii) the expense of placing one or more
"tombstone" advertisements or promotional materials as directed
by you (provided, however, that the aggregate amount thereof
shall not exceed $10,000) and of offering memorabilia; (viii) all
costs and expenses of the Company and its employees (but not of
the Underwriters or its employees) associated with due diligence
meetings and presentations (including the payment for road show
conference centers); (ix) any and all taxes (including without
limitation any transfer, franchise, capital stock or other tax
imposed by any jurisdiction) on sales of the Securities to the
Underwriters hereunder; and (x) all costs and expenses incident
to the furnishing of any amended Prospectus or any supplement to
be attached to the Prospectus as required by Sections 3(a) and
3(d), except as otherwise provided by said Sections.
(b) Underwriters' Expense Allowance. In addition to
the expenses described in Section 8(a), the Company shall on the
First Closing Date pay to the Underwriters' the balance of a non-
accountable expense allowance, which shall include fees of
Underwriters' Counsel, exclusive of the fees referred to in
Section 3(b), of which a non refundable advance of $50,000 has
been previously paid (that being an amount equal to three percent
(3%) of the gross proceeds received upon sale of the Firm
Securities). In the event that the Over-Allotment Option is
exercised, then the Company shall, on the Option Closing Date,
pay to the Underwriters based on the number of Option Securities
to be sold by the Company, an additional amount equal to three
percent (3 %) of the gross proceeds received upon sale of any of
the Option Securities, in the amount of $________ if the
Over-Allotment Option is exercised in full.
(c) No Finders. No person is entitled either directly
or indirectly to compensation from the Company, the Underwriters
or any other person for services as a finder in connection with
the Offering, and the Company hereby indemnifies and hold
harmless the Underwriters, and the Underwriters hereby
indemnities and hold harmless the Company from and against all
Liabilities, joint or several, to which the indemnified party may
become subject insofar as such Liabilities arise out of or are
based upon the claim of any person (other than an employee of the
party claiming indemnity) or entity that he or it is entitled to
a finder's fee in connection with the Offering by reason of such
person's or entity's influence or prior contact with the
indemnifying party.
10. EFFECTIVE DATE. The Agreement shall become effective
upon its execution, except that you may, at your option, delay
its effectiveness until 10:00 a.m., New York time, on the first
full business day following the Effective Date, or at such
earlier time after the Effective Date as you in your discretion
shall first commence the initial public offering by the
Underwriters of any of the Securities. The time of the initial
public offering shall mean the time of release by you of the
first newspaper advertisement which is subsequently published
with respect to the Securities, or the time when the Securities
are first generally offered by you to dealers by letter or
telegram, whichever shall first occur. This Agreement may be
terminated by you at any time before it becomes effective as
provided above, except that the provisions of Sections 6, 8, 9,
13, 14 and 15 shall remain in effect notwithstanding such
termination.
11. TERMINATION.
(a) Grounds for Termination.
(i) This Agreement, except for Sections 3, 6, 7,
8, 13, 14, 15 and 16, may be terminated at any time prior to the
First Closing Date, and the Over-Allotment Option, if exercised,
may be cancelled at any time prior to the Option Closing Date, by
you if in your sole reasonable judgment it is impracticable to
offer for sale or to enforce contracts made by you for the resale
of the Securities agreed to be purchased hereunder, by reason of:
(A) the Company having sustained a material
loss, whether or not insured, by reason of fire, earthquake,
flood, accident or other calamity, or from any labor dispute or
court or government action, order or decree;
(B) trading in securities on the New York
Stock Exchange or the American Stock Exchange having been
suspended or limited;
(C) material governmental restrictions
having been imposed on trading in securities generally which are
not in force and effect on the date hereof;
(D) a banking moratorium having been
declared by federal or New York State authorities;
(E) an outbreak or significant escalation of
major international hostilities or other national or
international calamity having occurred which affects this
Offering;
(F) the passage by the Congress of the
United States or by any state legislative body of similar impact,
of any act or measure, or the adoption of any orders, rules or
regulations by any governmental body or any authoritative
accounting institute or board, or any governmental executive,
which is reasonably believed likely by you to have a material
adverse impact on the business, financial condition or financial
statements of the Company;
(G) any material adverse change in the
financial or securities markets beyond normal fluctuations in the
United States having occurred since the date of this Agreement;
or
(H) any material adverse change having
occurred, since the respective dates for which information is
given in the Registration Statement and Prospectus, in the
earnings, business, prospects or condition (financial or
otherwise) of the Company, whether or not arising in the ordinary
course of business.
(ii) The Underwriters shall have the right, in
their sole reasonable discretion, to terminate this Agreement,
including without limitation, the obligation to purchase the Firm
Securities and the obligation to purchase the Option Securities
after the exercise of the Over-Allotment Option, by notice given
to the Company prior to delivery and payment for all the Firm
Securities or the Option Securities, as the case may be, if any
of the conditions enumerated in Section 4 are not either
fulfilled or waived by the Underwriters on or before any Closing
Date.
(iii) Anything herein to the contrary
notwithstanding, if this Agreement shall not be carried out
within the time specified herein, or any extensions thereof
granted by the Underwriters, by reason of any failure on the part
of the Company to perform any undertaking or satisfy any
condition of this Agreement by it to be performed or satisfied
then, in addition to the obligations assumed by the Company
pursuant to Section 9(a) hereof, the Underwriters shall provide
the Company with, and the Company shall pay, a statement of the
Underwriters' accountable expenses.
(b) Notification. If you elect to prevent this
Agreement from becoming effective or to terminate this Agreement
as provided by this Section 11 or by Section 10, the Company
shall be promptly notified by you, by telephone or telegram,
confirmed by letter.
12. UNDERWRITERS' WARRANTS. On the First Closing Date, the
Company shall issue and sell to you, for a total purchase price
of $10.00, and upon the terms and conditions set forth in the
form of Underwriters' Warrants filed as an exhibit to the
Registration Statement, an option entitling you to purchase
100,000 Shares and 300,000 Warrants at an exercise price equal to
140% of the initial public offering price per unit exercisable
for a period of four years commencing one year from the Effective
Date (the "Underwriters' Warrants"). The Underwriters' Warrants
grant to the holders thereof certain "piggyback" registration
rights for a period of five years, and demand registration rights
for a period of four years, commencing one year from the
Effective Date with respect to the registration under the
Securities Act of the securities issuable upon exercise thereof.
In the event of conflict in the terms of this Agreement and the
Underwriters' Warrants, the terms and conditions of the
Underwriters' Warrants shall control.
13. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. The respective indemnities, agreements,
representations, warranties, covenants and other statements of
the Company and the Underwriters set forth in Sections 3, 6, 7, 8
and 9 of this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of any other
party, and shall survive delivery of and payment for the
Securities and the termination of this Agreement. The Company
hereby indemnifies and holds harmless the Underwriters from and
against all Liabilities, joint or several, to which the
Underwriters may become subject insofar as such Liabilities arise
out of or are based upon the breach or failure of any of the
provisions of Sections 3, 6, 8 and 9.
14. NOTICES. All communications hereunder shall be in
writing and, except as otherwise expressly provided herein, if
sent to you, shall be mailed, delivered or telegraphed and
confirmed to you at Global Equities Group, Inc., ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, with a copy sent
to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.,
Mound, Cotton & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
or if sent to the Company, shall be mailed, delivered, or
telegraphed and confirmed to it at Baltia Airlines, ▇▇-▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ____________,
with a copy sent to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
15. PARTIES IN INTEREST. This Agreement is made solely for
the benefit of the Underwriters, the Company, and, to the extent
expressed, any person controlling the Company or the
Underwriters, as the case may be, and the directors of the
Company, nominees for directors of the Company (if any) named in
the Prospectus, officers of the Company who have signed the
Registration Statement, and their respective executors,
administrators, successors and assigns; and no other person shall
acquire or have any right under or by virtue of this Agreement.
The term "successors and assigns" shall not include any
purchaser, as such, from an Underwriter of the Securities.
16. CONSENT TO JURISDICTION. Each of the parties hereto
irrevocably agrees that any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions
contemplated hereby may be instituted in any New York court,
irrevocably waives, to the fullest extent it may effectively do
so, any objection which it may now or hereafter have to the
laying of venue of any such proceeding and irrevocably submits to
the exclusive jurisdiction of such courts in any such suit,
action or proceeding. The Company has appointed Mound, Cotton &
▇▇▇▇▇▇, New York, New York, as its authorized agent (the
"Authorized Agent") upon whom process may be served in any such
action arising out of or based on this Agreement or the
transactions contemplated hereby which may be instituted in any
New York court by the Underwriters or by any such person who
controls an Underwriter, expressly consents to the jurisdiction
of any such court in respect to any such action, and waives any
other requirements of or objections to personal jurisdiction with
respect thereto. Such appointment shall be irrevocable. The
Company represents and warrants that the Authorized Agent has
agreed to act as said agent for service of process, and the
Company agrees to take any and all action, including the filing
to any and all documents and instruments, that may be necessary
to continue such appointment in full force and effect as
aforesaid. Service of process upon the Authorized Agent and
written notice of such service to the Company shall be deemed, in
every respect, effective service of process upon the Company.
17. CONSTRUCTION. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State
of New York, without giving effect to conflict of laws. The
parties agree to submit themselves to the jurisdiction of the
courts of the State of New York or of the United States of
America for the Southern District of New York, which shall be
the sole tribunals in which any parties may institute and
maintain a legal proceeding against the other party arising from
any dispute in this Agreement. In the event either party
initiates a legal proceeding in a jurisdiction other than in the
courts of the State of New York or of the United States of
America for the Southern District of New York, the other party
may assert as a complete defense and as a basis for dismissal of
such legal proceeding that the legal proceeding was not initiated
and maintained in the courts of the State of New York or of the
United States of America for the Southern District of New York,
in accordance with the provisions of this Section 15.
18. ENTIRE AGREEMENT. This Agreement and the Underwriters'
Warrants contain the entire agreement between the parties hereto
in connection with the subject matter hereof and thereof.
19. COUNTERPARTS. This Agreement may be executed in two or
more counterpart copies, each of which shall be deemed and an
original but all of which together shall constitute one and the
same instrument.
If the foregoing is in accordance with your
understanding of our agreement, kindly sign and return this
Agreement, whereupon it will become a binding agreement between
the Company and the Underwriters in accordance with its terms.
Very truly yours,
BALTIA AIR LINES, INC.
By:_______________________________
Name:
Title:
Accepted as of the date
first above written:
New York, New York
GLOBAL EQUITIES GROUP, INC.
By:________________________
Name:
Title:
SUNCOAST CAPITAL CORP.
By:________________________
Name:
Title:
SCHEDULE A
Number of Number of
Shares of Warrants to be
Underwriter Common Stock to Purchased
be Purchased
Global Equities Group
Inc.
Suncoast Capital Corp.
Total: 1,000,000 3,000,00